Investment option in Private Fund

Private funds are funds in which investors can choose a variety of investment forms and participate in the formulation and investment policies in order to be in line with their objectives and goals as possible. It is also able to adjust investment strategies to suit the changing market conditions. In order to receive the highest return under acceptable risk.

Ownership of property or funds will be the customer under the customer's name. The name of the management company has been specified together to indicate the rights in the management of client assets. Custodian is the custodian of the assets and securities of the fund. The custodian must be approved by the Office of the Securities and Exchange Commission (SEC) and must be a third person separately from the management company for transparency in fund management. In addition, private fund investments have been inspected and supervised by the management company. So, investors will receive services that are efficient, standardized, transparent and can be inspected.

Currently, investing through private funds is becoming more popular because each investor has different needs for return on investment and investment restrictions. So, if you can design an investment style in your style by receiving advice appropriate investment advice and planning from investment experts will be another way for you to achieve your investment goals at the right level of risk.

How are private funds different from general mutual funds?

As already mentioned above Private funds are funds that are created by investors (natural persons or juristic persons) using money and assets to assign the management company to be the investment manager instead. Which the investment model is very flexible able to adjust investment policies according to customer needs as well. While mutual funds will be raising funds from retail investors Come together as a large sum of money and registered to be a juristic person. After that, the management company will use the funds to raise funds. To invest in securities or assets according to the policy approved by the mutual fund management project. Each investor will receive the "Unit Trust" as evidence of ownership in the money invested. In addition, investors in mutual funds will not have the right or participate in the formulation of investment policies in mutual funds that they can invest in.

What are the fees for private funds?

1.Management Fee: The fee that the asset management company collects from private fund management. The fees charged will be around 1-2% depending on the amount of investment and the type of assets invested.

2. Custodian Fee is the cost that the custodians of private funds collected from the fund.

3.  Performance Fee is the fee that the Asset Management Company agrees with investors that if the performance exceeds the specified return (Hurdle Rate) Will request a share from the excess of Hurdle Rate. For example, if the Hurdle Rate is set at 10% per year if in the past year, private fund management companies receive returns of 12% per year in excess of 10% Per year is 2%. Asset management companies request a share of profit at 20%, which is equal to 0.4% (20% x 2%), allowing investors to receive a total return of 11.6% per year. On the other hand, if the return of the private fund is less than or equal to 10% per year, this part of the fee will not be charged. And if any year in which the fund has suffered losses, the asset management company must manage the fund to have the highest net asset value (High Water Mark) before collecting the performance fee as agreed.

4.  Other fees such as stamp duty, securities trading fee, auditor fees (if any), etc.

If interested in investing in private funds, please contact any investment management companies (asset management companies). In most cases, all companies have investment services in private funds. Before investing, investors should attend the presentation of the private fund manager on how to manage our money, how was the past performance? and how much does it cost to manage the fund?

Therefore, investing in this private fund It is another option for investors that can have the freedom to invest their own suitably. However, not everyone will be able to invest in this form. Investors must have large funds (approximately 5 million baht) and have a higher administrative fee than investing in a mutual fund. It is suitable as an alternative for those who have a large sum of money but do not want to invest in the same format and want a difference and a higher return. However, investors may have a higher risk. Should carefully study all information before making an investment decision


Article by: Nipapan Poonsatiansup,CFP® Dependent Financial Planner